Understanding the Purchase of Life Insurance
If you have children, a spouse or others who financially depend on you, then the purchase of life insurance is a smart move to make. Life insurance will help your dependents cover bills and expenses in the event of your unexpected death.
Those Who Purchase of Life Insurance
Many people make the decision to purchase of life insurance to protect the financial future of their children and/or spouses. It can replace the income the insurer would have provided their family. Life insurance is not a luxury, but it’s a smart investment for many.
Purchase of Life Insurance as Term or Whole Life
If you are considering the purchase of life insurance, you should understand there are two basic types – term life and whole life. Term life is the most affordable option, but as in the name, it is limited to a specific time period. Term life insurance can cover 10 – 20 years. If your death happens within in the term, your insurance policy will be paid in full. Whole life insurance covers you for your entire life, but it is more expensive than term life insurance. Whole life insurance also has a cash value that grows over time.
Making Payments After Purchase of Life Insurance
After the purchase of life insurance, you must make the monthly payment for your policy to be active. Most companies offer a 30-day grace period, but any missed payments will result in the termination of your policy – with no refunds. You can also make more premium payments or add on additional benefits. Additional features may vary from each company.
Additional Benefits to Include in Purchase of Life Insurance
There are some additional benefits, called riders, to consider including in the purchase of life insurance. One is to add on a premium waiver for if you become disabled. A return of your premium benefit can ensure that you will receive the premiums you have paid at the end of the term if you did not use the policy. One rider allows you to purchase additional insurance later in life without having to provide health information.
The Right Policy For You
When looking into the purchase of life insurance, one should determine what type of policy fits their needs the best. Term life may be best if you only need coverage for a specific time, such as until children are grown or until your mortgage is paid off. If you have a dependent reliant on you for life, such as a disabled person or spouse, whole life may be the better option. Whole life is also a good choice for those with a large estate or family business to protect.
Your family can use life insurance to pay off debts, cover funeral expenses or pay for monthly bills. It is smart to make the purchase of life insurance to protect their future after you are gone.